Nike Starts Selling Self-Lacing HyperAdapt Sneaker For $720, Plus Fitbit To Aquire Another Pebble
QUOTE OF THE DAY
“Not fun” — Kroger CEO Rodney McMullen, describing the unsavory effects of sagging food prices. The nation’s largest supermarket chain (+3.25%) reported an 8% drop in profits and lowered guidance for the rest of the year, but investors didn’t seem to mind.
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- The major U.S. indices finished mixed on Thursday—the Dow reached a new all-time high, while a struggling tech sector held the Nasdaq to a small loss
- Energy stocks continued to rally as crude jumped above $50 on rising oil optimism
- Japan’s Nikkei index (+1.1%) closed at a 2016 high, with strong Chinese manufacturing data and the OPEC production cut boosting Asian markets
‘Tis the Season
…For consolidation in the struggling wearables industry. Bet you didn’t see that one coming. Or this: Fitbit (+0.72%) has reportedly agreed to acquire smartwatch maker Pebble for around $40 million, a much lower price tag than previous offers Pebble had allegedly received over the last few years. Pebble is best known for smashing Kickstarter records when it raised over $20 million for its smartwatch through crowdfunding, but has fallen on some hard times due to softened demand for wearables, faulty products and difficulty paying down its debt. Fitbit’s had a struggle of its own, with its stock down 70% year-to-date, so is this acquisition a “misery loves company” play? Not quite. Fitbit’s likely reason for the acquisition is to acquire Pebble’s talent, software and intellectual property, which still hold a ton of value. Let’s hope it works out; the clock is ticking.
Ulta Really Did it This Time
…And last time, and the time before, and the time before, and the time before. Cosmetics and fragrance giant Ulta Salon (-0.81%) reported third quarter profits of $87.6 million, beating analyst expectations. Gold star? You bet: this is the beauty giant’s eighth consecutive quarter of double-digit growth. How is Ulta pulling it off? First, the company has been moving toward e-commerce, responding to the trend of declining in-store sales. Smart. Other growth factors? New acquisitions, increased Ulta brand awareness, strong loyalty program growth and improving supply chain performance. The company expects high sales in its final quarter, and hopes to continue to wow those analysts.
A Fancier Brew
…And a pricier one too. We’re actually talking about coffee here. More specifically, Starbucks: Howard Schultz is stepping down as CEO of the Seattle-based coffee company (-3.26% after hours) to work on Starbucks Reserve Roasteries—a high-end coffee shop reserved for those special snowflakes who are willing to pay $12 for a cup of joe (we’re not judging, we promise). Schultz has stepped down from the CEO post before to work on the company’s IPO and global strategy, which helped the company become an international juggernaut—the hope is that Schultz’s new focus on high-end coffee will lead to similar success. President and COO Kevin Johnson will be taking over as CEO, and Schultz will remain a chairman. This is the company’s biggest move since expanding abroad 20 years ago; let’s hope it lives up to the tastebuds of coffee snobs.
Step Aside Robots
…The gas guzzlers are here to stay…at least for now. Despite stalling industry growth after six straight years of gains, five of the top six automakers saw jumps in November’s auto sales report, with a 10% sales spike from General Motors (+5.50%) leading the way. What’s with the sudden growth in a world headed toward self-driving cars? Well, low gas prices and a 13% increase in discounts certainly lent a hand. Interestingly, the average transaction hit a new record high—thank you SUVs. Now that was good news, but the potentially great news is the seemingly newfound optimism about the U.S. economy. All hail November.
- Billionaire Steve Cohen’s hedge fund to pay $135 million to settle class action suit
- HBO and Cinemax now available through Amazon Prime
- Airbnb cracks down on rentals in London, Amsterdam
- Princess Cruises to pay record-breaking criminal fine for ocean pollution
- Monday: Government T-Bill Auctions
- Tuesday: Tiffany (+) Earnings; U.S. Q3 GDP (2nd Estimate) (+); Consumer Confidence (+); Case-Shiller Home Price Index (+)
- Wednesday: Royal Bank of Canada (-), American Eagle (-), Box (+) Earnings; Private Employment Report (+); Pending Home Sales (+/-); Beige Book (+); Personal Income and Outlays (+/-)
- Thursday: Kroger (+/-), Dollar General (-), Ulta Salon (+), Smith & Wesson (-) Earnings; Motor Vehicle Sales (+); Weekly Jobless Claims (-); PMI Manufacturing Index (+); ISM Manufacturing Index (+); Construction Spending (+)
- Friday: Big Lots Earnings; November Jobs Report
Time to Lace Up
Good news if you hate tying your shoes…and if you happen to have $720 to spare. This week, Nike started selling its new sneaker, HyperAdapt. Pushing further into tech and away from wholesale retailers, the shoe has literal self-tying laces, and is only available on the Nike+ app and at the new Nike retail store in New York City. Here’s more:
- These new sneaks have been in the works for a while. Nike’s digital sport team started development on self-lacing technology nearly a decade ago, and they don’t plan on stopping with HyperAdapts.
- After shying away from hardware like the 2012 FuelBand (pulled just two years later), Nike has been focusing on software and apps. In just the past four years, Nike has reportedly spent $100 million on software products like the Nike+ app.
- Nike’s plan to double its direct sales to consumers will no doubt have an impact on big chains. As the industry’s largest vendor, Nike products account for a whopping 72% of Foot Locker merchandise purchased.
Interview Question of the Day
Santa distributes two gifts to every child on the street during Christmas evening. He mistakenly gives four gifts to some children. If he distributed 50 gifts to 21 children, how many children got four gifts? (Answer)
Business Person of the Day
Agustin Carstens, the head of Mexico’s central bank, resigned on Thursday. His exit comes with the country’s currency under pressure following the election of Donald Trump, with plenty more trouble to come. He was seen as a central figure in maintaining Mexico’s economic stability and fiscal discipline. Happy trails, Agustin.
Food for Thought
A federal jury in Dallas on Thursday ordered Johnson & Johnson and its DePuy Orthopaedics unit to pay more than $1 billion to six plaintiffs who said they were injured by Pinnacle hip implants. The jurors found that the metal-on-metal hip implants were defectively designed and that the companies failed to warn consumers about the risks. Doesn’t sound like a family company to us.